Greed Is Good

By Heather Bourbeau

Published: November 28, 2004

AN EMPIRE OF WEALTH
The Epic History of American
Economic Power.
By John Steele Gordon.
460 pp. HarperCollins Publishers. $26.95.

In less than 400 years, the United States has gone from a collection of European outposts to a dominant military and financial powerhouse. Perhaps it is only appropriate that the history of an economy as impressive as America's should be told by an author with multiple personalities -- unabashed cheerleader, high school teacher, agile storyteller. Yet in reading ''An Empire of Wealth: The Epic History of American Economic Power,'' one wishes John Steele Gordon had chosen just one.

To his credit, Gordon, a historian and columnist at American Heritage magazine, exhibits a firm grasp of political economy and finance without suffering from the fabled equivocal nature of economists. From the founding of successful East Coast colonies by British joint stock companies to the attacks of Sept. 11, he ably traces the birth and development of the American economy. As he notes, the United States has been ''positioned to exploit first and most fully the boundless opportunities of a new political economy based on opportunity.'' Too often, however, the text reads like a primer rather than the involving ''epic'' of its subtitle.

Epics of any sort are best hung on mythic figures, and when Gordon, an avid raconteur of character-driven financial histories, concentrates on the personalities of America's history, his prose comes alive. Tales of railroad and shipping magnates like Cornelius Vanderbilt, trading tycoons like J. P. Morgan and oil barons like John D. Rockefeller serve as much as portholes to the drama of eras long gone as parables of excess and wasted opportunities.

Familiar personages like Henry Ford get a welcome revisiting here. As Gordon points out, Ford's personality ultimately helped his competition for decades to come. ''By the mid-1920's the Model T was out of date both technologically and commercially, but Ford refused to change.'' So General Motors leapt into the void created by his stubborn insistence on cost savings rather than on customer satisfaction, promoting novel ideas like different-colored cars and electric starters. Ford the man never lost his focus, but Ford the company would never regain its lead.

Of equal interest is Gordon's history of taxation. The development of the income tax system, coupled with the opening of the economy to international competition through the lowering of tariffs, underscores the divergent evolutions of the Democratic and Republican parties, as well as the reasons behind a persistent North-South divide. And the contentious past can illuminate the drawbacks and benefits of tax-cut and budget proposals now being debated in Washington.

Yet, as with any book that condenses centuries into a few hundred pages, several topics are brushed over. Little more than a dozen pages are allotted to the last 20 years, a period of great transformations in the American and world economies. At the same time, basic concepts of money and inflation are given more space than is warranted.

One of the more curious omissions concerns the role of property rights. In his introduction, Gordon emphasizes the legacy of England's open system of property ownership as one explanation for the extraordinary growth of the United States, as compared with the other New World superstar, Argentina. Yet he fails to provide a country-by-country analysis of past competitors, and he ignores the ownership issues in a more mature American economy. Notably, there is a lack of attention paid to the enlarging unified market of Europe.

Nonetheless, tucked inside ''An Empire of Wealth'' are kernels of cautionary wisdom. Each chapter builds on arguments about the necessary power of monetary policy, the benefits of free trade, and the delicate balance between debt for stimulation and deficit drags on the economy. In the end, Gordon's chronicle is an inconsistent but satisfying collection of tales.